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American Conservative Union AFA Action July 30, 2020 The Hon. Eugene Scalia Secretary of Labor 200 Constitution Ave NW Washington, DC 20210 Dear Mr. Secretary: The investment of private retirement funds into Chinese companies that do not comply with basic transparency standards, and in many cases rely upon child- and slave-labor, is incompatible with fundamental American values and must be discontinued. Fortunately, the Department of Labor’s proposed rule, Financial Factors in Selecting Plan Investments1 seeking to rein in politicized investing by private pension fund managers provides the ideal opportunity to exclude non-transparent Chinese assets from inclusion in our nation’s retirement portfolios. The underlying proposed rule is an important protection for pensioners and 401(k) investors against involuntarily paying the price for a political “thumb on the scale,” one that has the effect of shortchanging retirement security. Under the banner of “environmental, social (justice), and governance (ESG),” mutual fund and pension managers are increasingly investing in ways that advance their political and social predilections, but may not be consistent with their duties to clients. While such an arrangement may be acceptable to individual investors, Labor’s proposed rule rightly points out that under the Employee Retirement Income Security Act of 1974 (ERISA), private pension fund managers must act with an “eye singularly” on their fiduciary responsibility to plan participants and beneficiaries. Proponents of ESG causes have chosen to ignore the financial consequences of their actions and weaponized financial tools to pressure corporations to support their priorities. Many politicized fund managers push ESG as they can often charge higher fees for such investments while selling their political investments as the product of diligent financial analyses. The Labor Department is reminding pension managers that there is a place for politics and a place for sound investment decisions. When ESG investments put politics over fund performance, they are unsuitable. There are already indications that fund managers may seek to flout Labor’s rule if it is promulgated in its current form. It has been suggested that ESG fund managers might simply change their marketing materials to state that their ESG investments are actually designed to maximize returns. In crafting its final rule, Labor must, therefore, also ensure that fund managers further increase the transparency of their investment choices. To that end, the proposed rule should be amended so as to require that private retirement investments be transparent, assuring fund managers and their beneficiaries that the companies they are buying are sound. Incredible as it may seem, since at least 2013, when former Vice President Biden engineered a Memorandum of Understanding 2 giving Chinese companies a waiver from U.S. transparency requirements, retirement funds, pensions and other non-retirement investors have splurged on such 1 https://www.federalregister.gov/documents/2020/06/30/2020-13705/financial-factors-in-selecting-plan- investments#open-comment 2 http://upload.news.esnai.com/2013/0617/1371444412766.pdf companies – even though they do not meet the same auditing standards as their American corporate counterparts. The effect is to put U.S. retirement investors at great risk. Now is the time to change this, by amending the proposed rule to require specifically that any company that wishes to be eligible for retirement or pension investing meet our nation’s statutory and regulatory standards for transparency. To add insult to the injury arising from the present, non-transparent arrangement is the fact that many Chinese companies whose stocks are owned by U.S. retirement accounts and defined benefits pension plans are up to their necks in producing goods using child- and slave-labor. 3 By allowing investments into these companies, the Labor Department is effectively making individual 401(k) owners or pensioners parties to and profiteers from the exploitation of the victims of such cruel abuse. This is wholly repugnant and unacceptable. For all these reasons, we strongly support the Department of Labor’s proposed rule-making aimed at curbing some inadequately transparent and politicized investing by private pension fund managers. We urge as well that this principle be expanded to ensure that all assets held by private retirement funds, including the mutual funds in such accounts, are fully transparent consistent with the laws of the United States. Sincerely, The Hon. Edwin Meese III Sen. Jim DeMint Attorney General of the U.S. Chairman Conservative Partnership Institute The Hon. Frank R. Wolf Former Member of Congress The Hon. J. Kenneth Blackwell Former Treasurer of State Ohio The Hon. John Poindexter Vice Admiral, U.S. Navy (Ret.) Alfred S. Regnery Former National Security Advisor to Chairman the President Conservative Action Project The Hon. Tony Perkins LTG Thomas G. McInerney, U.S. Air Force (Ret.) President Chairman Family Research Council YottaStor LLC Lt. Gen. William "Jerry" Boykin, LTG Steven Kwast, U.S. Air Force (Ret.) U.S. Army (ret) CEO Executive Vice President Kwast Enterprise, LLC Family Research Council Tim Wildmon J. Kyle Bass President Chief Investment Officer American Family Association Hayman Capital Management Bill Walton BG Robert Spalding, U.S. Air Force (Ret.) Chairman CEO Resolute Protector Foundation Subutai LLC 3 https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods Eric Metaxas LTC Allen B. West, U.S. Army (Ret.) Author and Talk Show Host Former Member of Congress Metaxas Media Chairman Republican Party of Texas Keith Frankel CEO Ambassador Henry F. Cooper Windmill Health Products Former Chief Defense and Space Negotiator Former Director, Strategic Defense Initiative Andrew Whitney Executive Chairman Brent Bozell Oceanic Energy Founder Media Research Center Dr. Bob Fu Founder & President Rory O'Connor China Aid President and Chairman Athenai Institute Dr. Jianli Yang Founder and President Joseph Bosco Citizen Power Initiatives for China Former China Desk Officer Department of Defense Peter Huessy President Michael Horowitz Geostrategic Analysis CEO 21st Century Initiatives Herman Pirchner, Jr. President Russell Ramsland American Foreign Policy Council Co-Founder Allied Special Operations Group Enghebatu Togochog President Fred Weinberg Southern Mongolian Human Rights Information CEO Center USA Radio Networks E. Patrick Jenevein III Jenny Beth Martin CEO Honorary Chairman Pointe Bello Tea Party Patriots Action Brigitte Gabriel Frank J. Gaffney Chairman Vice Chairman ACT For America Committee on the Present Danger: China Kevin Jessip Rick Manning Chairman of the Board President SaveThePersecutedChristians.org Americans for Limited Government Peggy Dau GYSGT Jessie Jane Duff. U.S. Marine Corps Special Liaison Representative (Ret.) (Ret.) The Voice of the Martyrs Military Advisor, Committee on the Present Danger: China Bishop E.W. Jackson Robert Broussard President President STAND Foundation, Inc. UST David L. Black, Ph.D. COL James E. Dau, U.S. Marine Corps (Ret.) Founder and President CEO and President (Ret.) 2ndVote The Voice of the Martyrs COL Robert L. Maness, U.S. Air Force (Ret.) Marc Little President Chairman Iron Liberty Group LLC Center for Urban Renewal and Education Frank Wright, Ph.D. Floyd Brown CEO Publisher D. Janes Kennedy Ministries The Western Journal Xiaoxu Sean Lin, Ph.D. Suzanne Scholte Executive director President Global Alliance Against Communist Propaganda Defense Forum Foundation and Disinformation Steven W. Mosher The Hon. Gary L. Bauer President President Population Research Institute American Values Rod D. Martin George Parker Founder and CEO Executive Director The Martin Organization, Inc. Revealing Light Ministries Greg Mitchell Peter Flaherty Chairman Chairman International Religious Freedom Roundtable National Legal and Policy Center Dean Baxendale LCDR Demetrius Cox, U.S. Navy (Ret.) President and Publisher Investor Optimum Publishing International The Hon. Kenneth deGraffenreid Dennis Black Former Special Assistant to the President President for National Security Affairs American Jobs Alliance Keith E. Sirois The Hon. Salih Hudayar President & CEO Prime Minister Capital Management HPP, Inc. East Turkistan Government in Exile Terri Marsh, Esq. Oluwasayo Ajiboye Executive Director President Human Rights Law Foundation Mission Africa International Maria Zack Dr. Jianli Yang Chairman Founder and President Quantum Solutions Software Citizen Power Initiatives for China Glenn Preston Story Maura Moynihan Co-Founder & President Author Patriot Mobile Students for a Free Tibet Rod Vandenbos Preston Schleinkofer CEO President Buzzbox Civil Defense Radio Seton Motley Joseph A. Morris President Assistant U.S. Attorney General (President Less Government Reagan) Saulius "Saul" Anuzis James L. Martin President Founder/Chairman 60 Plus Association 60 Plus Association C. Preston Noell III Kenneth R. Timmerman President Author and President Tradition, Family, Property, Inc. Foundation for Democracy in Iran Daniel Perrin Thomas Pyle Founder President HSA Coalition American Energy Alliance Robert K. Fischer Judson Phillips Meeting Coordinator Founder Conservatives of Faith Tea Party Nation J. Christian Adams Tim LeFever President Chairman Public Interest Legal Foundation Capitol Resource Institute Charlie Copeland Steve Berger President Pastor Intercollegiate Studies Institute Grace Chapel Joan Holt Lindsey Donald L. Woodsmall President President Lindsey Communications
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